Classical embryology studies in amphibians have demonstrated that important step in anteroposterior axis formation is the polarization of the prospective mesoderm. The dorsal mesoderm then transfers this polarity by induction to the overlying ectoderm during gartrulation. The molecular nature of the mesodermal polarity is not known although a number of specific gene products, such as the homeobox gene, Xhox 3, are thought to play a role. We have isolated and characterized another potential regulator of anteroposterior axis formation, Xenopus-posterior (Xpo). The Xpo protein belongs to a new class of developmentally expressed proteins. It is activated at mid-blastula transition and is expressed maximally during mid-gastrulation to neurulation. Its expression is restricted to the posterior dorsal mesoderm and ectoderm. A single copy of a finger motif, of the "CCHC" type, is located in the carboxyl terminus. Related motifs are found in the nucleocapsid protein of all retroviruses where this domain serves an essential role in retroviral replication and in cellular nucleic acid binding protein (CNBP), a protein that binds to the sterol regulatory element. As with other potential regulators of axis formation, Xpo expression is induced in ectodermal explants by treatment with basic FGF and polypeptide growth factors found in the medium conditioned by the Xenopus XTC cell line. Taken together, Xpo's properties suggest that it may play a role in the organization of the anteroposterior axis during development.